Schafer v. Deszcz
Citation | 120 Ohio App.3d 410,698 N.E.2d 60 |
Decision Date | 09 May 1997 |
Docket Number | No. OT-96-053,OT-96-053 |
Court | United States Court of Appeals (Ohio) |
Parties | SCHAFER et al., Appellees, v. DESZCZ et al., Appellants. * |
D. Kevin O'Reilly, Chardon, and Gary A. Kohli, Oak Harbor, for appellees.
David M. Buda, Columbus, for appellants.
This is an appeal from the trial court's grant of appellees' motion for summary judgment. The Ottawa County Court of Common Pleas found that a deed restriction involving the right of first refusal violated the rule against perpetuities, as codified in R.C. 2131.08.
In 1994, appellees, James P. and Judith A. Schafer, Michael J. and Lisa A. Schafer, and Scott P. and Kelli D. Schafer, purchased Sublot Nos. 388, 395, and 426 in Burgundy Bay Subdivision No. 3, Ottawa County, Ohio. Although the three warranty deeds issued for the three parcels contained no reference to such a document, a "Declaration of Restrictions," recorded on August 8, 1967, 1 is allegedly applicable to all sublots in Burgundy Bay Subdivision Nos. 1 through 6. That Declaration of Restrictions contains the following relevant language:
Section D to the Declaration of Restrictions states that all of the restrictions therein are covenants running with the land that are binding on "National Resort Lands, Inc., its purchasers, and their respective heirs, executors, administrators, successors and assigns * * *."
On January 29, 1996, appellees filed suit against, among others, 2 appellants, Robert A. and Beverly Deszcz (the owners of Sublot No. 394) and the Burgundy Bay Property Owners Association, Inc. Appellees asked the court to, inter alia, quiet title to Sublot Nos. 388, 395, and 426 and to declare the material restriction in violation of the rule against perpetuities and, therefore, unenforceable.
Appellants filed a counterclaim and a third-party complaint against Thomas C. and Jane M. Jacobs, the former owners of Sublot No. 395. In both the counterclaim and third-party complaint, appellants asked the court to enforce the "right of first refusal" provision in the Declaration of Restrictions, to order the conveyance of Sublot 395 to Robert and Beverly Deszcz, and for monetary damages.
Appellees filed a motion for summary judgment arguing, in part, that the right of first refusal set forth in the Declaration of Restrictions was "void ab initio" because this provision violated the rule against perpetuities.
After considering appellees' motion and appellants' memorandum in opposition and all evidentiary materials filed in support of the parties' contentions, the trial court granted the motion for summary judgment, declaring:
Based on this holding, the trial court quieted title of Sublot Nos. 388, 395, and 426 in appellees and found in favor of appellees on appellants' counterclaim and third-party complaint.
Appellants appeal that judgment and assert the following assignments of error:
In the instant case, the central question is whether the trial court erred in granting appellees' motion for summary judgment.
In reviewing a motion for summary judgment, an appellate court employs the same standard as the trial court. Midwest Specialties, Inc. v. Firestone Tire & Rubber Co. (1988), 42 Ohio App.3d 6, 8, 536 N.E.2d 411, 413-414. Summary judgment is appropriate when the following have been established: (1) there is no genuine issue as to any material fact; (2) the moving party is entitled to judgment as a matter of law; and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence construed most strongly in its favor.
We shall now apply these principles to appellants' assignments of error.
Due to the manner in which they are argued and for ease of discussion, we shall consider all of appellants' assignments of error together. Appellants do not set forth any separate arguments in support of Assignments of Error (A) or (E). Apparently, appellants' contentions as they relate to all five of their assignments of error are as follows: (1) The rule against perpetuities is applicable only to interests in real property, not contractual obligations; (2) Deed restrictions, or covenants that run with the land are contractual obligations, not property interests; therefore, they are not subject to the rule against perpetuities; and (3) The right of first refusal in the present case is such a deed restriction and is not subject to the rule against perpetuities. Appellants also assert that the owners of the sublots in Burgundy Bay Subdivision have a vested interest (fee simple) in that property subject only to a condition subsequent (restraint on the sale of the property), which is not within the rule against perpetuities. 3 For the following reasons, we find these arguments without merit.
Ohio's codification of the common law rule against perpetuities is found in R.C. Chapter 2131. As applicable to the case before us, R.C. 2131.08 4 provided:
The fundamental purpose of the rule against perpetuities was, and is, to prevent restraints on the alienation of property that might be perpetual or unreasonably long, while, in recognition of a property owner's rights to the use and disposition of his property, allowing restraints limited within the strict period of the rule. Quarto Mining Co. v. Litman (1975), 42 Ohio St.2d 73, 76-77, 71 O.O.2d 58, 59-60, 326 N.E.2d 676, 680.
The majority view in the jurisdictions addressing the issue of whether rights of first refusal, more commonly known as "preemptive rights," are a property interest rather than a contractual obligation have concluded that these rights are a property interest. Ferrero Constr. Co. v. Dennis Rourke Corp. (1988), 311 Md. 560, 564-566, 536 A.2d 1137, 1139 ( ). Therefore, a majority of courts find that rights of first refusal in the future sale/purchase of property are subject to the rule against perpetuities. Id. at 564-568, 536 A.2d at 1139-1140. See, especially, Lake of the Woods Assn., Inc. v. McHugh (1989), 238 Va. 1, 4, 380 S.E.2d 872, 873 ( ). See, generally, Annotation (1971 & 1997 Supp.), 40 A.L.R.3d 920, 939-948, Section 8. As noted in Ferrero Constr. Co. v. Dennis Rourke Corp, 311 Md. at 567, 536 A.2d at 1140:
Although Ohio courts have not expressly...
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